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RealTime Economic Issues Watch

In RealTime posts, PIIE senior staff and colleagues discuss the fast-moving economic news, financial developments, and public policy choices confronting the United States and the world.

Recent Posts

An Important IMF Reform

by | February 12th, 2016 | 09:55 am

The world became a bit safer last month—at least at one margin. The International Monetary Fund (IMF) adopted a lending reform with important implications for the future stability of the world economy. To understand the reform, one has to start with financial globalization. Over the past few decades, cross-country financial flows have increased, and countries […]

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Bail-in Securities and the Current Equity Market Turmoil

by | February 12th, 2016 | 09:47 am

The current equity market slide is being led by European banks and stems in large part from market concerns over their newly issued bail-in securities. Bail-in securities begin life as a five-year bond that converts into equity when bank capital falls below a certain threshold. At higher thresholds these bonds stop paying interest or become […]

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Designing Growth-Indexed Bonds When Interest Rates Are Low

by | February 11th, 2016 | 09:00 am

Our recent Policy Brief [pdf] focuses on the benefits of growth-indexed bonds for a country’s solvency, by reporting the evolution of the debt-to-GDP ratio. In a world of perfect markets, only solvency would matter, but in practice, the time pattern of cash flows is likely to be crucial, for two reasons. First, debt crises are […]

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PIIE Chart: Infant Mortality Rate in Post-Communist Countries—Progress Varies 25 Years after Communism

by and Owen Hauck | February 10th, 2016 | 04:29 pm

A little more than 25 years after the fall of communism, post-communist states have achieved divergent results in their qualities of life. This chart, part of an upcoming study by Simeon Djankov and Owen Hauck, shows former Soviet states continue to lag behind Eastern Europe and the Balkan states in infant mortality rates.1 Turkmenistan, a […]

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For Europe, Financial Innovation Is a Better Bet than a Fiscal Transfer Union

by | February 10th, 2016 | 03:37 pm

The fire started in the basement, almost completely burning down the house. Fortunately, your neighbor was out of town. You had told him to replace his old furnace to save money, but he procrastinated. Many neighbors offered to help, some more than others. The neighborhood’s solidarity was touching but ultimately proved insufficient. Your neighbor was […]

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The SDR Goes the Way of the Renminbi

by | February 5th, 2016 | 04:58 pm

The International Monetary Fund’s decision to add the Chinese renminbi to the basket of currencies that compose the Special Drawing Right (SDR) at the end of November 2015 was no small choice. Set to take effect October 1 this year with a weight of 10.92 percent versus the total basket, the inclusion of the renminbi […]

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Tapped Out: Azerbaijan Must Diversify Its Economy Away From Oil

by | February 5th, 2016 | 04:54 pm

Azerbaijan’s economy is reeling, after years of extraordinary growth fueled by oil revenues. The latest World Bank figures suggest the economy is going to contract in 2016, and the budget deficit may reach over 5 percent of GDP. The way out is diversification of exports. Hard times have come to Baku. In the last week […]

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Eastern Europe: Freedoms under Pressure

by and Jan Zilinsky | February 4th, 2016 | 01:09 pm

Poland is the latest Eastern European country to veer away from the rule of law—and the core of Europe. The European Union has been too busy to take sufficient notice of the new Polish government’s proposed legislation to severely curb media freedom. In established European democracies, media freedom, central bank independence, and the work of […]

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PIIE Chart: Average Life Expectancy in Post-Communist Countries—Progress Varies 25 Years after Communism

by | February 2nd, 2016 | 04:25 pm

A little more than 25 years after the fall of communism, post-communist states have achieved divergent results in their qualities of life. This chart, part of an upcoming study by Simeon Djankov and Owen Hauck, shows that former Soviet states continue to lag behind Eastern European and Balkan states in life expectancy.

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A New Fiscal Policy for Europe

by | February 2nd, 2016 | 02:55 pm

Heading into another discouraging year of weak growth and inflation and rising populism, the euro area needs a dramatic change of course—not only in its current policies but also in the rules holding it back. The European Central Bank (ECB) sees the recovery as “fragile” and with downside risks, projecting the unemployment rate to remain […]

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